Southern Company 2Q 2026 Earnings Call

My name is Christine and I'll be your conference operator today. At this time, I would like to welcome everyone to the Southern Company second quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If anyone should require operator assistance during today's conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Greg McLeod, Director of Investor Relations. Please go ahead, sir.

Thank you, Christine. Good afternoon, and welcome to Southern Company's second quarter, 2026 earnings call. Joining me today are Chris Womack, Chairman, President, and Chief Executive Officer of Southern Company, and David Paroch, Chief Financial Officer. Let me remind you that we will make forward-looking statements today in addition to providing historical information. Various important factors could cause actual results to differ materially from those indicated in the forward-looking statements, including those discussed in our Form 10-K, Form 10-Q, and subsequent securities filings. In addition, we will present non-GAAP financial information on this call. Reconciliations to the applicable gap measure are included in the financial information we released this morning, as well as the slides for this conference call, which are both available on our Investor Relations website at investor.southerncompany.com. At this time, I'll turn the call over to Chris.

Thank you, Greg. Good afternoon, everyone, and thank you for joining us for today's update. As you can see from the materials that were released this morning, Southern Company continues to perform exceptionally well, which supports a very bright future. We reported strong adjusted earnings results for the second quarter, with each of our businesses contributing to performance meaningfully above the estimate we provided last quarter. The extraordinary economic development momentum and demand for power across our southeast region that we've seen for the past several years continues, particularly from data centers and other large load customers, and our utilities are capturing this growth in a way that meaningfully benefits the customers and communities we are privileged to serve and supports our long-term outlook. In just the last quarter, through three projects across the state, Alabama Power added approximately three gigawatts, while Georgia Power signed a 3.2-gigawatt, 25-year contract for electric service with OpenAI for its recently announced site near Savannah, Georgia. This site, which is expected to take electric service in phases beginning in 2028, features one gigawatt of flexible demand response, helping to support reliable energy for all customers when demand is highest. Combined, these four projects representing six gigawatts of newly contracted customer load, along with agreements previously signed brings our total contracts and large load agreements across our electric subsidiaries to over 17 gigawatts by the mid-2030s. These projects are not just bringing in substantial construction work. They are creating thousands of permanent jobs and generating billions of dollars of investment for the local economies and our service territories, and we are proud to responsibly support this growth in a way that benefits the communities we serve. In Alabama, the three new contracts were a clear confirmation of the continued economic development momentum building across all our electric service territories and our differentiated large load capabilities. Increasingly, our vertically integrated, state-regulated model supports our ability to provide reliable power with speed and is an important differentiator for our new and existing customers. Our success attracting significant growth is a testament to the benefits that this model affords all our customers. As a comprehensive one-stop shop for power solutions and economic development, our electric operating companies utilize long-range integrated system planning processes to coordinate timely development of generation, transmission, and distribution assets through well-structured and transparent regulatory processes that are designed to serve growth reliably. The Southeast, with this robust network of transportation and logistics infrastructure, diverse workforce, and a constructive business climate, continues to be highly attractive for all forms of economic development, including hyperscalers, data center developers, and large industrial manufacturers. Looking ahead, the opportunities for additional new large load and data center customer growth remains robust. New projects continue to be added to our prospective pipeline, large industrial and data center projects, which remains well above 75 gigawatts. We are encouraged by the continued progression of potential large load projects in varying stages of advanced development. Beyond the 17 gigawatts already contracted, there are an additional 8 gigawatts of projects in late stages, including 3 gigawatts projected to be finalized in the near term. Clearly, the benefits of our approach are resonating with both new customers and several repeat large load customers during a time of increasing power demand. We are privileged to support this transformative growth. David, I'll now turn the call over to you for an update on our financial performance.

Thanks, Chris, and good afternoon everyone. For the second quarter of 2026, our adjusted EPS was $1.13 per share, 21 cents higher than the second quarter of 2025 and 13 cents above our estimate. The primary drivers of our performance for the current quarter compared to last year included increased usage and customer growth, along with higher AFUDC from ongoing construction projects, higher earnings from equity method investments, and tax-related impacts at our state regulated electric utilities. The improved results in the second quarter compared to the second quarter of 2025 were also supported by contributions from Southern Company Gas and some of our smaller complementary businesses, including Power Secure, where the distributed generation, backup generation, and bridge power solutions markets continue to expand. This was partially offset by interest expense from higher debt balances and dilution from additional shares outstanding. A complete reconciliation of year-over-year earnings is included in the materials we released this morning. Combined with our first quarter results, our adjusted EPS for the first half of the year is $2.46, well above our year-to-date expectations. With customer rates held stable at our two largest subsidiaries, this strong performance continues to be driven by increased sales and customer growth and strong execution across each of our regulated businesses and Southern Power. These results exemplify Southern Company's commitment to delivering for customers and investors. Looking towards the second half of the year, we anticipate this momentum continuing and now project our full-year 2026 adjusted earnings to be near or at the top of our 2026 adjusted EPS guidance range of $4.50 to $4.60. cents. Our adjusted EPS estimate for the third quarter is $1.65 per share. Turning now to retail electricity sales, year-to-date weather normal retail electricity sales were 2.3% higher than the first half of 2025, consistent with the trends observed earlier this year. This represents the highest retail sales growth through June we've seen in nearly two decades. Year-to-date weather normal retail electricity sales are higher across all customer classes, bolstered by continued residential customer additions, diverse industrial and manufacturing expansions, and significantly increasing usage from data centers. Approximately 11,000 new electric residential customers were added in the quarter, bringing our net electric customer ads to over 40,000 in the last year. Manufacturing and reshoring trends, particularly in Alabama, in the primary metals, stone, clay, glass, and pipeline segments supported continued industrial strength. Weather normal commercial sales grew 7.4% in the second quarter, bringing year-to-date weather normal commercial sales to 6% higher than the first half of 2025. Notably, data center usage was 55% higher compared to the second quarter of 2025 and is now up 49% year-to-date, primarily due to accelerating load ramps from our large load customers. System-wide, our data center load now exceeds 1.2 gigawatts, an increase of more than 500 megawatts over the prior year, and we expect this trend to continue accelerating as our 17 gigawatts of contracted demand comes online. As Chris mentioned earlier, economic development activity in the Southeast continues to be strong. In the last quarter alone, announcements were made for nearly $14 billion of investment and more than 3,000 new jobs, led by several new data center facilities in Alabama and a new Amazon warehouse in Georgia. The projects announced in the second quarter marked the second-highest investment level ever recorded in our electric territories, underscoring the strength of regional trends in economic development and ultimately helped shape future growth opportunities. Turning to our infrastructure build-out, the continued success of our operating territories in attracting significant new load is driving the need for additional new power generation and infrastructure across our Southeast region. Over the past several years, we've worked constructively with regulators to meet the demand for our growing system, securing approvals for 10 gigawatts of new company-owned generation resources, including thermal, battery, and solar resources, as well as hundreds of miles of new transmission lines. With the first two of several battery sites in service and benefiting customers and work on the three combustion turbines and plant gates advancing towards completion in the coming quarters, we continue to execute on the construction of our portfolio of new build generation projects. As our projected incremental load needs grow beyond our system's current and expected supply of generation capacity into the next decade, we remain well positioned to respond. Ongoing requests for proposals for RFPs at both Alabama Power and Georgia Power are underway for potential additional generation resources to help ensure that we can continue to provide a reliable and affordable service to all customers. These transparent and orderly processes are designed to facilitate the timely and cost-effective procurement of new generation needs in the early 2030s. To the extent that company-owned resources are selected through these active RFP processes and ultimately authorized by the respective PSEs, these new generation investments would represent substantial incremental investment upon our current base capital plan. As future capital investment opportunities materialize, we remain committed to funding incremental capital investments in a credit-supported manner. We continue to proactively address our identified equity needs to support our path towards 17% FFO to debt by 2029. In the second quarter, we sourced an additional $700 million of equity through our At the Market or ATM program with forward contracts that settle at our discretion through 2028. Together with a significant amount of equity previously sourced, we have reduced our projected remaining equity need by 2030 to $1.1 billion. Our proactive shareholder-friendly equity strategy combined with our disciplined approach in the debt capital markets and access to low-cost DOE loans continues to position us well towards our goal of efficiently meeting our future financing needs and achieving our long-term credit objectives. I'll now turn the call back over to Chris.

Thank you, David. We are truly in transformative times for the energy industry and our nation, and Southern Company has continually demonstrated that we are executing on this extraordinary growth in a way that protects and benefits customers and communities. Last week, the Southern Company Electric System was proud to formally reinforce this commitment by joining the National Ratepayer Protection Pledge alongside several other utilities. This pledge aligns with the Southern Company System's well-established approach to serving growth in a responsible manner while maintaining rate stability and reliability for millions of households and small businesses across the Southeast. We are confident the approach we're taking will deliver lasting benefits as we deliver rate stability for our customers. Recall, the framework work under which we approach contracting with large, low customers includes pricing with minimum bills to cover at least 100% of the incremental cost to serve. Large load customers are paying their full share. We also include provisions with strong protections in the form of termination payments backed by significant high credit quality collateral requirements that provide an additional layer of security. This large load contracting structure helps ensure investors and customers are protected while providing meaningful savings for existing customers. With retail base rates held stable in both Georgia and Alabama until 2029 and significant customer benefits identified and committed to based on previously signed large-load contracts, we are demonstrating that when growth is done right, everyone benefits. Across our businesses, we continue to demonstrate exceptional execution and meaningful progress delivering on this growth. Southern Company has a bright future, especially when considering the strength of the Southeast economy, the likelihood of additional large load contracts, incremental capital investment opportunities across our state regulated utilities, and our ability to capture value across the energy value chain through southern power investments in southeastern natural gas infrastructure and distributed and bridge power opportunities through complementary businesses like power security this extraordinary growth continues to strengthen our business fundamentals and expand capital investment opportunities well into the next decade and we continue to see momentum building in support of an improving growth outlook into the future. The success we have had in the first half of the year positions us exceptionally well to deliver on our near-term objectives while reinforcing and strengthening our confidence in our long-term outlook and our goal to be towards the top half of our long-term earnings trajectory. Ultimately, this is a long-term business in which capital is deployed to serve customers for many decades. As we deliver for the communities we serve each and every day, as we work towards our goal to provide sustainable long-term growth and outstanding financial integrity year after year, we are well positioned to continue executing with a discipline that is rooted in our long-standing commitment to our customers and investors alike as we conclude our prepared remarks today i want to emphasize southern companies commitment to making the communities that that we have the privilege to serve better off because we are there as a partner to the communities and cities where we operate we were proud to help support atlanta's efforts over the last two months and hosting eight FIFA World Cup matches on the world stage. The success was a culmination of years of hard work by local, regional, and state leadership and included significant investment in local infrastructure to welcome hundreds of thousands of visitors to Atlanta. This event was an excellent showcase for the southeastern United States and an opportunity to continue building upon the momentum that defines this region, which will have an impact that will resonate for decades to come. Operator, we are now ready to take questions.

Thank you. We will now be conducting a question in position. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the mind of Nick Campanella with Barclays. Please receive with your question.

Hey, good morning, or good afternoon, rather. Hope you're hearing me. Hey, Nick. We can hear you, Nick. Hey, how's it going? just now that you have higher visibility on um contracted megawatts load ramps you know specifically 28 increased and 2030 increased by a few gigawatts here so how does that incremental sales revenue and visibility um how does that impact your ability to maybe extend or stay out further and you've kind of committed to on the regulatory front and just um maybe you can kind and talk to that a little bit. Thanks.

Let me start, then I'll turn it to David. But as we said in our prepared remarks, we do expect to be at the top half of our long-term earnings trajectory. And so, as we think about that, we think about the opportunity that it provides for us in terms of meeting our long-term outlook. But clearly, as we think about rate proceedings and regulatory proceedings, those are things that conversations will have with regulatory bodies. But as we have extended our rate stability focuses in both Georgia and Alabama, we think it creates optionality for us to continue to provide rate stability for our customers. Dave, anything you want to add?

Yeah, thanks, Chris. And hey, good afternoon, Nick. Great question. You know, as we work through these processes with the success that we've had in signing these contracts, you know, it does give us a great deal of flexibility in enhancing the benefits for customers. Clearly, we've got the ability to look for more generation capacity through the structure processes that we have in Alabama and Georgia. And, you know, like we've talked about in the past, we are probably about a gig or two away from, if you will, selling out the capacity that we had approved in Georgia last year. So now we're going to work through that process. And, you know, the success that we've had in signing these contracts really gives us some durability toward the future and additional confidence in being able to deliver on our goals, you know, well into the next decade.

Thanks for those thoughts. And then maybe on the three gigawatts that you're finalizing stages for, is that within the 2030 window or is it after it? And what are kind of the key milestones you still need to get through on those three gigs of finalizing? Thank you.

Sure. No, for sure. Working through those contracts, those are likely to go into 2028 and beyond. So, you know, they'll, like every other big data center project, large load customer, have a ramp-up period. A couple of them that we're working on would initiate that ramp-up in 2028 and bring us into the next decade.

Thank you. Thanks, Nick.

Thanks, Nick.

Our next question comes from the line of Shaw Parisa with Wells Fargo. Please keep with your question.

What's up, Shaw? How are you doing, man? Oh, good. How are you doing? Great.

Wonderful. Excellent. So just, Chris, on Southern Power, the existing tolling agreements are going to start to roll off. I know there's obviously an opportunity to repurpose the capacity towards serving the hyperscalers. Can you maybe discuss how you're thinking about that opportunity set, have conversations with the hyperscalers begun with these assets, and would any opportunities be captured within your existing 75-gigawatt pipeline? I guess, what does this mean to the plan, I guess?

Yeah, and, Charles, we've talked about this, I think, on a number of calls in terms of the opportunity as these contracts begin to roll off and expire, the opportunity for recontracting. And so the team is now in the midst of having those conversations with a host of different counterparties that you understand our risk profile there in terms of making sure that they're creditworthy counterparties. But you look at in terms of where they were contracted from a pricing standpoint, in terms of where the market is today, we do see upside opportunities and those pricing opportunities that will contribute to the durability and the length of our long-term plan. And so we've talked about this a good bit with you guys, and so that's where we are, and we're going to continue to pursue this opportunity as we move down that path and as these contracts expire and the opportunities for recontracting positions itself.

Got it. And these wouldn't just be typical tolling agreements. They would be the energy and capacity side, I'm assuming, under a long-term PPP. Perfect. Okay. You got it. And then I know, Chris, your favorite topic is new nuclear, right? So I guess with sort of lessons learned between unit three and four and sort of this big attention now to large scale reactors, should there be like any financial backing from the government and hyperscalers taking on some of the cost overrun risk? Is that something Southern would be interested in building, i.e. through the Pac-10, just any color on potentially participating in this consortium, or are you just looking to license the blueprints? Thanks.

Charles, thank you very much. And you've heard me talk a lot about the importance of new nuclear, helping this country meet this incredible moment that's in front of us. I mean, I do think as we look into the 2030s, this country needs to have, particularly in the mid-30s, need to have some more nuclear units in operation. I have to give a great big shout out and compliment to the Trump administration. I mean, there are a number of actions they have taken on the regulatory front with bringing groups together around long lead time items. Just a lot of things that they're doing, and we're having a lot of conversations with them about how to make this a reality. I mean, Southern's not going to be next. Let me be clear about that. But we're going to continue to work constructively and very, I would say, pretty aggressive with this administration and with a lot of other parties to see how we can get this done. Because I do think it's important for, from an energy policy standpoint, from the economy to meet this moment and meet this demand that we see in the marketplace today. just i guess the follow-up is are you finding traction with the hyperscalers taking on cost over on risk above budgeted amounts for these ap1000s i don't want to get ahead of kind of that that that firm conclusion but yes we are we're having conversation with them in terms of what role they can they can play in this conversation in this equation fantastic thank you guys so much I appreciate it. See you soon. Okay. Thanks, y'all. We appreciate you, ma'am.

Our next question comes from the line of Carly Davenport with the Edwin Sacks. Please proceed with your question.

Hey, Carly. Hey, Carly. Hey, good afternoon. Thanks for taking the questions. Maybe to start, you've talked in the past about the potential for upside on the capital plan related to FERC pipeline investments. Anything new on that front in terms of timing, especially as you think about the incremental RFPs that maybe could point to some incremental gas plant builds?

Sure, Carly. Thanks. Great question. You know, like we've talked about with the contracts that we're signing, the growth in the southeast region, strong economy, we definitely see opportunities in our FERC-related pipeline, FERC-regulated pipeline investments. We've talked about some of those, but, you know, as the opportunities continue to grow, we do see the possibility of expanded opportunity in those investments that we currently hold. So really excited about those prospects. You know, the RFPs that we've got in place and the processes that we have in our regulated jurisdictions will help inform that, but we see great potential in the Southeast to continue to grow those investments.

Yeah, Carl, the only thing I would add is that infrastructure, you know, I mean, across the Southeast, and you've heard us say it before, is needed to support this growth that is here and for the growth that is to come. So there is more to be done here. We think there's real opportunity for us in terms of all the pipeline expansion opportunities to align with the needs that we have that are portrayed in our RFPs.

Got it. Okay. That's really helpful. And then And just to follow up on the RFPs that you have ongoing for the generation needs through 2032, did those filings already contemplate some of the progression in the load pipeline that you've seen over the last quarter or so? And is there potential room for upside on even incremental to the incremental RFPs if you think about the conversion of the pipeline?

Incremental to the incremental. I love that term. I'll have to think about how to use that. Appreciate that. But yeah, the opportunities that we see there are well baked into the RFPs. We've talked about our load forecast and the processes that we use to, in a rather conservative way, project what that need could be. And as we continue to sign these contracts, that's really going to be the foundation for the RFPs that we have, both in Alabama and Georgia. And so there is certainly potential out there to go and procure more generation than we have identified right now. We just can't get ahead of the process. There's a thorough screening structure, good vetting, and everybody's going to have an opportunity to participate in those processes. And also, I think it's worth reminding that as we regularly say, there's not placeholders in our capital plan. we don't get ahead of our regulators and so obviously you can see how the the upside that we've talked about is not in our capital plan right now so the rfps that are open in alabama the rfps that are open in georgia none of that is contemplated in our capital forecast at the moment i would add the open our contract in georgia pushes us beyond our recently approved capacity by right around one gigawatt.

So just making sure that was real clear in terms of where we are and what the upside opportunities are.

Got it. Very clear. Thank you guys for the time.

Our next question comes from the line of Steve D'Ambresi with RBC Capital Markets. Please proceed with your question.

Hey, good morning. Thanks very much for taking my question. Just had a quick one, kind of a follow-up on Carly's question, actually. Just to put a little bit of a finer point on it, you know, it's my understanding that any, basically any new incremental load, especially large load in Alabama would drive basically incremental generation requirements. So obviously you have the RFP outstanding, but if the load forecast is up three gigawatts in the quarter, and then you're talking about open AI, at least one gigawatt, but I think the RFP is two to six, but is a range beyond that as well. like can you just frame is this four to five plus gigawatts of gen that you know we could put some type of of you know capacity multiple on and try and you know estimate what the size is or i obviously don't want to put the cart in front of the horse but want to make sure we're level setting on what's in the plant and what the opportunity is yeah great great question and and really a good way to think about it and appreciate your your thought on not getting

in front of the process. We're definitely focused on that. But I think the way you're thinking about it is directionally correct. We've got the newly signed contracts in Alabama. That's going to inform that. That's about three gigs right there, contracts signed. We're about a gig or so oversubscribed, if you will, in Georgia based on what we've signed. And keep in mind, I think we've shared this in the past, maybe a decent rule of thumb to think about capital opportunities going forward is about $2 billion or so, a little bit above maybe related to a gig of new generating capacity. You know, that kind of covers a broad range of different generating sources for us.

Okay, that's very helpful. And then just in terms of like the finalizing and late stage uh pipelines that you continue to to fill up you know obviously you've seen great momentum and and progression and kind of converting this but again like how does how do these finalizing gigawatts kind of filter into this rfp and and just like what's the timeline for like when those loads would energize and when we have to think about resources to serve those just trying to like sequence it out here sure no i mean those those projects will vary project by project and And so as we finalize those agreements and they are certified and blessed by the commissions, then we'll factor those into the RFP process going forward to match up with the year in which those resources are, in fact, needed.

And so as we kind of in a position to inform, as we finalize those contracts, that is information then that will be forthcoming once those contracts are finalized and the projects are approved. and as also then as we provide you with an updated load forecast. So there are a couple of proceedings that will unveil how that all lines up and matches up with the needs and what the new opportunities are going forward.

And I might add, you know, as we work through those processes, you know, to the extent that the company is selected to provide that generation resource, you know, we're going to probably start feathering in some spend And it's also not currently contemplated in our projections in the sort of the 28 timeframe. And that'll start to feather in as we build out that generation to come online in the 31-32 timeline.

Good. That's very helpful. Thanks, Chris. Thanks, David. Appreciate the time.

Very good. Thanks, Matt. Have a good day.

Our next question comes from the line of Jeremy Tonna with J.P. Morgan. Please proceed with your question.

Hey, Jeremy. Hi. Good afternoon. I just wanted to pivot to Mississippi, if I could, for a minute here, and we've had recent, you know, stakeholder conversations in the state where it seems like the state is particularly receptive to incremental data center activity, you know, more than what we usually hear. And so I was just curious, I guess, your outlook there, if you could maybe talk a little bit more on the, you know, the opportunity set and what you see maybe down the pipeline there.

As we have said before, we've talked, I guess, a number of quarters now about seeing this momentum migrate to the west, and you're clearly seeing that now in Alabama. You've seen success with 500 megawatts projects in Mississippi, and as we talk about our pipeline, that also reflects that ongoing activity, increasing activity that we also see in the Mississippi Territory.

Got it. Thank you for that. And then just wanted to go to OpenAI again with demand response there. Just wondering how is demand response fitting into your conversations with projects overall in the pipeline? How do you factor that into, you know, kind of your assumptions going forward?

Yeah, so great question. And it does enter into all those conversations. And we'd like to see that continue along and stay flexible. It's actually one of the great aspects that our three electric jurisdictions have where we're not limited to just a tariff. we can negotiate bilateral contracts that leverage the flexibility and the demands that these hyperscalers want and be able to price that right. So I think this is a great trend, and I'd like to see it continue, and it is a part of every conversation that we have.

You know, one of the things I'd add there is that very early on in our conversations with hyperscalers, we begin to raise matters like technical requirements in terms of how their operations would impact the system, how it would impact the grid, and not just being a taker, but creating flexibility to provide benefits to the entire grid. So I think as we look at this broader conversation about data centers, and I think these things have got to be communicated more broadly in terms of value and benefits and flexibility and how they're being supportive of the grid. This is how they're being supportive of communities. I mean, there's an incredibly positive narrative and story to be told here. We all have got to be, I think, a little more voice these benefits, a little more stronger in terms of making sure that gets into the conversations about data centers as we hear all the conversation and noise right now about what's going on. So just a great win-win, I think, for us as well as the customer.

Yeah, that story needs to be kind of told a bit more. It makes a lot of sense to us.

Thank you very much.

Our next question comes to the line of Steve Fleischman with Wolf Research. Please proceed with your question.

Hey, Steve. How are you doing, ma'am?

Hi, good afternoon. I'm doing well, thanks. So just, could you just remind in Georgia for OpenAI and other customers who maybe aren't investment grade credits or strong investment grade, how do the tariffs work from a credit standpoint, the large low tariffs?

Yeah. So remember the, if you will, the kind of four pillars under which we're negotiating structuring these contracts in the territories. You've got long-term contracts, and you hit it exactly the opening of a contract is 25 years. Our minimum bills cover 100% of the incremental cost to serve. There's default provisions in there, and those default payments are tied to collateral. And so, you know, we've got a lot of flexibility in terms of the forms of collateral that we can take from these counterparties. And, you know, if a parent guarantee works for us, depending on the credit quality of the counterparty, we'll work with that. But in some some instances that they're not quite at the investment grade that we want to see. We'll look to lines of credit. We'll look to surety bonds. We'll look to other combinations. But at the end of the day, the collateral portfolio that we're going to take to back up these contracts is going to put us at about an A-minus or better position. And keep in mind, you asked specifically about open AI, and that's about $28 billion of collateral that will be in the aggregate upon full ramp. So I think we're in a really good spot for that. And keep in mind, we have the flexibility to determine what collateral is accepted to us, acceptable to us, and puts us in a position of about A minus or better. So combination of lines of credit, surety bonds in this particular case.

Okay, that's very clear. Thank you. The RFPs, could you, I apologize if I missed this earlier, but just can you remind us just the timelines for, you know, finalizing answers and then approvals?

Sure. So, the process is going to play out through most of the rest of the summer into the fall, I think by year end, we should have a good idea of what projects were selected in through the IRFP process. And then once those projects are selected, that will move into a certification process that will take place throughout much of 2027. So latter part of 2027 will have good clarity as to what actually gets certified. And Alabama is in a fairly similar timeline. So you can kind of count on both the proceedings in Georgia and Alabama. Not exactly to run in parallel, but pretty close.

And then last question, just on Georgia, maybe, you know, you guys have clearly highlighted some of the benefits, both economic and customer rate benefits of the data centers. But then I think there's still been political noise there, particularly maybe more from the Democrats, mixed on data centers. Can you just give us maybe a little lay of the land there, and is there any kind of appreciation growing for some of the benefits to kind of offset some of this kind of pushback or reported alleged pushback?

Steve, I would say I would suggest you look at the OpenAI announcement in terms of how that played out with that community as they highlighted the project, but they also highlighted along with us in terms of the rate stability that comes along and benefits that come along with the project, but also how they communicated kind of the economic community benefits that align with that project. Yeah, I mean, there's noise all across the country about data centers, But I think there's no moratorium across the state. And yeah, there may be some moratoriums in various counties, but I think you can continue to see progress, activities, projects move forward in our territory. Once again, I'll say we've got to do a better job, hyperscalers need to do a better job of explaining the benefits and value and dispelling some of the misinformation that's out there on social media, but say you continue to see the pipeline continue to remain very full and continue to grow, and you continue to see projects advance and projects get approved all across our territory.

Hey, Steve, if you don't mind, let me clarify one thing. You were asking specifically about OpenAI and collateral, and I was talking about the entire portfolio, so I apologize for that. The whole portfolio of 17 gigs, we got about $21 billion of collateral, and I recognize you were speaking specifically to the OpenAI contract, so I just wanted to clarify that for you.

Yeah, no, that's very helpful. Thanks so much.

Anything else, Steve?

Our next question comes from the line of Andrew Weisel with Scotiabank. Please proceed with your questions.

Hey, Andrew. Hey, everyone. Good afternoon. Congrats on the OpenAI deal. Certainly a massive project. I want to follow up on the gigawatt of demand response. I agree that that's a great resource. I know we've seen something similar in Michigan, but am I right that this is the first time you're doing something like that? And I know that the press release talks about long-term savings for customers. Have you quantified that? And is it more about accelerating speed to market for the data center, or does the rest of the customer base see any benefits?

I mean, the rest of the customer base will see benefits across the entire project. I mean, what we're doing is doing peak load periods, doing high demand periods. We're able to save the peak. And so as we operate this economic system on a minute-by-minute, second-by-second basis, we're always looking to put online the most economical resource to meet and serve that load. And so that is tremendous value and benefits to the entire system, having that resource be flexible. So it's an incredible value, incredible benefit to the entire grid as we operate our system.

And was this the first time you've done that for a data center?

Yes. Yes, it is.

Okay, great. Hope to see more of it. And secondly, on equity, I know you've been pretty active. You settled $2 billion of the ATM that was priced in 2025, and you've priced $700 million that will settle to $28 million. Are you able to give any guidance on how to think about the pace of equity and when it will actually hit over the next few years? I know there's a lot of moving parts there, and I don't expect you to get too specific, but how should we think about the year-by-year dilution and whether it'll be ratable or maybe accelerated? Any color there would be very helpful.

Yeah, I think you said it really well. There's a lot of moving parts in terms of making the decisions on how to draw those equity commitments. And keep in mind, they're available to us really at a few days' notice. And so we have a great deal of flexibility to manage our liquidity over that period. But, you know, we generally want to shape that in terms of kind of mirroring, if you will, our capital outlays for the construction effort that we're going to have. But it also, you know, dovetails into the plan to get near 17% FFO to debt by 2029. And I think we've settled about $2 billion recently, and that, again, like I said, kind of helps us down the path of 17% FFO to debt. You know, and bottom line, we just, we're going to continue to do this in the most shareholder-friendly manner that we can, protect the credit quality, and continue to draw on this as needs and opportunities become available.

Okay, fair enough. We'll model it up as we can. Thank you.

Thank you.

Our next question comes from the line of Julian DeMoulin-Smith with Jeffries. Please proceed with your questions.

Julian. in.

Hey there, sir.

Hey, what's going on, guys? Thanks for the time. I appreciate it very much. Thank you very much. Absolutely. Nice. Of course, nicely done here. Look, I wanted to take this in the direction of rates, rate cases, et cetera. I mean, obviously, transposing this real ongoing success. How do you think about the opportunity here, Georgia and Alabama, but especially in Georgia, right? Obviously, there's a regular cadence to these cases, and obviously, there's the desired maybe at times to update tariffs and rate structure. But is there an opportunity to come back with a bigger rate credit here? I mean, obviously, the number, I think, from last year at this point was north of a half a billion. I mean, is there a way to, again, do what you did before and effectively sidestep the revenue process here?

Julian, let me say, as you know, we don't get ahead of our regulators. We work very constructively with them, kind of hand in hand. I mean, our goal at all times is to keep rates as low as possible for our customers, and so we are thrilled with how we are delivering rate stability to our customers through 28, and so, I mean, as we continue to sign these contracts, I mean, you know, there are conversations that we'll have and have other considerations about what's possible, but I'm not going to get ahead of any process or any conversation with the commission at this point in time. But, yeah, growth provides us incredible opportunities to benefit customers, but also to continue to deliver rate stability. I mean, I was listening to a lot of commentary yesterday after the Fed decision, a lot of commentary about inflation and electric rates going up across the country. Electric rates are not going up in our territory. We're delivering rate stability to our customers, and that's something that we are thrilled and privileged to make available and provide to our customers, that benefit. Ability is savings. One of the things I'll try to remind ourselves is that being flat or being frozen, there's real kind of nominal benefits in terms of savings for customers as we hold rates flat going forward.

Yeah, no, I mean, clearly you have a demonstrated track record on that front. And then Alabama, how do you think about this growth transposing itself, A, in terms of the process? How do you take this load growth and put it into rates? Again, I know you've got this rate C&P. I mean, in theory, that's how you bring on some of the new capacity, I take it, for the incremental three gigs. And then separately, is there some sort of equivalent thought process on that statement? in particular. I get that your comments were a little generic, too.

Yeah, you got it. I mean, they'll go through those traditional proceedings in terms of getting these projects and getting the load needed to be certified through the C&P process. And so, as you know, they've made some changes in the structure and size of the commission. They're going to have a new Secretary of Energy in Alabama. They've just gone through processes of kind of, I would say, codifying the procedures of how we are serving signing up these contracts so Alabama I think is has a very orderly process about how to approve these contracts but also then get these projects approved by the Commission and get them in the rates as well as through their RP process so what do we say with three gigawatts as to long-term long-term benefits for customers so great opportunities in Alabama.

Awesome. Thank you, guys. Really appreciate it. Thanks, Julian. Thanks, Julian.

Our next question comes from the line of Richard Sunderland with Truist Securities. Please repeat with your questions.

Hey, Richard. Hey, good afternoon. Thanks for the time today. Just circling back to Southern Power, you know, I know you had some updates last quarter on this front.

Serious about kind of the tone and interest on the remaining up rates and then the brownfield efforts i think you tapped for an update later this year as well um you know given the load trends how's all that trending and are you still thinking about having some sort of a southern power update this year yeah um great question uh we continue to evaluate those opportunities i mean the conversations that we're having with um our current counterparties as well as exploring opportunities with new counterparties at Southern Power are proving to be very fruitful. I'm looking forward to working through those. But, you know, keep in mind the business model under which we operate Southern Power, right? We don't go and build something and see who shows up. So it's a very disciplined and structured process that we continue to engage in these conversations. So there's a lot of great potential out there to not just reprice the contracts that will come rolling off into the next decade, but also take advantage of the announcements that we made last quarter in terms of those up rates. And as we continue to have those conversations and explore those opportunities with the current customers at Southern Power and potential new customers, then we'll have better clarity as to when and how we can execute on the additional upgrades that you alluded to.

Yeah, but we look forward to giving you updates on the activities that's occurring and that's under consideration at Southern Power. I think there's some real opportunities there.

Yeah, that's great to hear. And then, I guess, turning back to the script, you know, recognizing you pulled out the sales growth on the quarter and thinking about some of the data center load added to the system recently. Any learnings you'd highlight from some of that ramp and the sales trends and, I guess, in particular, how that might apply to your outlook for all this load growth and, you know, running that through to the ETS growth guidance as well? Thank you.

No, I start by saying, I mean, one of the things we see is that, you know, we have to work very closely with these projects in terms of what their ramp rates are. They may not be what was projected when the projects were initially approved, but we work very closely with them in terms of kind of what those ramps will be. But once again, remember the minimum bills that we have. I mean, we kind of somewhat what we call decouple revenue because we do have those minimum bills. But from an operational standpoint, we have to work very closely with them in terms of understanding what their ramp rates are in terms of what the system implications are. But the bottom line is the load is very real. And so we know it may not be there initially, but we know that it's coming.

And I might add that the customers that we've been serving for a number of years, we have learned so much from their experience that has helped us inform these new contracts that we're signing. And so, you know, like Chris mentioned, the protections that we've put in place for customers and the company in terms of the minimum bills, that is really, we think, going to be a distinct advantage going forward that will protect our customers and the company in terms of that type of stability that we're trying to deliver. And, you know, we've crossed over the 1,000-megawatt line this particular quarter, and the growth has just been fantastic in that portfolio of data centers and large load customers that we're currently serving. Really exciting.

It's great, Paul. I appreciate the time today. Thank you. You're welcome.

Our next question comes from the line of Travis Miller with Morningstar. Please proceed with your question.

Hey, Travis. Hey. Thanks for the time. You're welcome. Going back to the OpenAI project, I wonder if you could talk a little more about what made that location unique and why both you and OpenAI decided that that location could handle a project of this size? And then secondly, build on that, are there other areas in your service territory or what are the other areas where a project of that size can be constructed and operational in such a short time?

Yeah, I mean, these projects and the processes of economic development, it's a lot of courting, a lot of evaluations of sites and locations and geography, typography, location to infrastructure, electric infrastructure facilities and other energy resources being available. I mean, so it's not a set criteria, but there's a lot of kind of investigation of sites to see what works for the projects that these companies want to want to construct. And so, and we're glad when they work out. We're also thrilled that we have a number of meaningful sites that are available for additional consideration across our entire service territory. uh not going to give you kind of exactly where those sites are i mean that's a lot of that's kind of protected uh but know that we have additional opportunities uh for for similar projects i mean the savannah area the the economy there is very strong with uh the hyundai plant uh that is that is there and continues to to grow and expand uh the port of savannah uh that continues to kind of lead this country in activity from a shipping standpoint. So Savannah, Evingham County, those areas have proven to be just wonderful sites for economic activity.

Understood. Yes, thank you. And one real quick one in terms of meeting any future equity needs as you add to the CapEx. Any interest in taking minority interest investment or another partner to meet some of those?

You know, we look at a lot of different structures, but at the moment, we just don't see that as a need. Love the cards that we have. Love the opportunities that we've had in terms of issuing the securities and the receptiveness in the marketplace. I just don't see that as a need for us, at least for the foreseeable future.

Got it. Okay. Thanks a lot. Thank you.

And that will conclude today's question and answer session. Sir, are there any closing remarks?

Just let me thank everybody for joining us today. Let me conclude by saying this is an incredibly exciting first half of the year for Southern Company, and it sets us up for the rest of the year, but I also think it speaks to what a bright future we have. And so thank you for joining us today. Have a good rest of the day.

Thank you, sir. Ladies and gentlemen, this concludes the Southern Company 6th Quarter 2026 Earnings Call. You may now disconnect.